• FTSE 100 closes up

  • Sterling surges

  • LSE rejects approach from Hong Kong Exchanges and Clearing

  • S&P 500 nearing record high

5.20pm: Footsie closes higher

FTSE 100 ended a slow trading day higher as big name banks gained ground as the pound surged and US, China trade fears eased.

The UK’s premier share index finished up 22.79 points to stand at 7,367.46. Over the week as a whole, the blue-chip index was up around 1.16%.

David Madden, analyst at London based CMC markets put the rise down to “a mixture of the feelgood factor from yesterday’s European Central (ECB) meeting and the improved trading relationship between the US and China..”

In the US, the S&P 500 is at 3,013.36 – not too far off its record high set on July 26 this year of 3,025.86. The Dow Jones Industrial Average  is at 27,239, up around 56 points. Its record high is 27,359.16 hit on July 15 this year.

Investors are growing ever more optimistic about the US-China trade talks, especially after it emerged President Trump was open to the idea of brokering an interim deal.

In the currency markets, the pound added 1.14% against the US dollar, boosted by a perceived rising chance of a Brexit deal.

RBS (LON:RBS), Barclays (LON:BARC) and Lloyds (LON:LLOY) were all up on the day and making up three of the top five Footsie risers, each adding over 5%.

3.30pm: London stocks stuck

US equities got off to a decent start but their London counterparts remain stuck in neutral.

In London, the FTSE 100 index is less than a point lower at 7,344.

On t’other side of the Atlantic, the Dow Jones flashed out of the traps to nudge 27,250 before coming off the top to 27,231, up 49 points. The S&P was up 3.6 points at 3,013.2.

US retail sales rose 0.4% in August, compared to expectations of a 0.2% increase.

“The report again underlines the point that while not everything is rosy in the US economy, overall it remains some way off recession and market expectations for aggressive Federal Reserve policy stimulus may be misplaced. Together with yesterday’s inflation data, it takes the already remote prospect of a 50bp [half point] rate cut next week firmly off the table,” declared James Knightley, the chief international economist at ING Economics.

Back in the UK, the London Stock Exchange Group PLC (LON:LSE), as expected, rejected the takeover approach from the Hong Kong Exchanges and Clearing Limited.

The shares were up 3.4% at 7,496p.

“Unattractive, offering a puny dowry and coming with volatile and unpredictable parents, HKEX never looked like the ideal bride. No great surprise to see the LSEG board has politely but firmly rejected the HKEX bid,” commented Neil Wilson at markets.com.

“The letter to HKEX is not full of praise. In fact the letter from chairman Don Robert scolds HKEX for making public the highly speculative bid only days after telling LSEG. As we said on Wednesday when news of the bid broke, this was always a non-starter,” Wilson said.

1.30pm: Back to square one

The FTSE 100 is back to square one and traders across the Square Mile are cursing themselves for not having booked the day off.

London’s index of leading shares was down just a couple of points at 7,343, despite sterling soaring by more than a cent to US$1.2448.

In the US, the major indices are expected to open higher, after some vaguely encouraging burbling last night from President Trump on the prospect of an interim trade deal with China.

“A lot of people are talking about it. I see a lot of analysts are saying an interim deal — meaning we’ll do pieces of it, the easy ones first – but there’s no easy or hard. There’s a deal or there’s not a deal,” the president said, taking a leaf out of the Jedi Yoda’s phrase book.

“But it’s something we would consider, I guess,” he told reporters.

The Dow Jones was expected to open at around 27,281 and the S&P at around 3,019 – up 99 points and 9 points respectively.

Turning back to the UK, utility company SSE PLC (LON:SSE) has finally offloaded its retail arm to the UK’s largest independent energy supplier, Ovo Group, in a deal valued at £500mln.

The shares were up 1.8% at 1,187.5p.

“SSE’s shareholders will also have their fingers crossed that a tighter business focus will result in better returns for their investment as the energy company’s share price has been very volatile in recent years,” said Russ Mould, the investment director at AJ Bell.

“Investors were dealt another blow earlier this year with a cut to the dividend, with inflation-linked income growth having previously been a core reason why so many people owned the shares in the first place,” Mould noted.

“SSE has now guided that the dividend for the current financial year won’t be affected by the OVO deal. This will be a relief to shareholders, so too news that it is still expecting to increase the dividend by the rate of RPI inflation for the subsequent three years,” he concluded.

12.15pm: Expectations of firm start on Wall Street boosts sentiment

Sterling’s strength continues to weigh down many blue-chips but expectations of a firm start on Wall Street have lifted sentiment some.

The dollar is struggling to nurse wounds inflicted from Thursday’s US inflation report, which showed core consumer prices in the United States rising more than expected in August. Although the headline CPI printed below market expectations at 1.7% yoy [year-on-year], prices excluding food and energy jumped 2.4% year-on-year in August, its highest level in more than a year. While this is unlikely to deter the Federal Reserve from cutting interest rates in September, it could influence what steps the central bank takes during the final quarter of 2019,” suggested Lukman Otunuga at FXTM.

“All eyes will be on the US retail sales data for August scheduled for release on Friday at 1230GMT. Markets are expecting retail sales to rise 0.2% during the month, a significant decline from the 0.7% witnessed in July. A figure that meets or prints below expectations may trigger concerns over the health of the US economy ultimately reinforcing the argument for deeper rate cuts by the Fed,” he added.

The FTSE 100 was down 11 points (0.2%). The FTSE 250 – less responsive to changes in the value of sterling – was up 99 points (0.5%) at 20,061.

FTSE 250 constituent JD Wetherspoon PLC (LON:JDW) was not participating in the advance, sliding 0.5% to 1,543p following its full-year results.

Adjusted profit before tax of £012.5mln was a tad below the consensus forecast of £013.5mln.

“Operating margin of 7.3% (down from 7.8% in FY18) is the lowest in the sector making it vulnerable to labour/food inflation, hence our HOLD stance,” said Liberum Capital Markets.

10.00am; Sterling’s revival weighs on large-cap equities

A resurgent pound is acting as a drag on blue-chips this morning.

Sterling was up by more than a cent against the US dollar at US$1.2447, which is great news for Autumn holidaymakers heading for the States but less helpful to many FTSE 100 companies, which earn lots of dollars but report their results in sterling.

In that context, a 23 point (0.3%) to 7,321 is not too bad a performance by the Footsie.

“The pound rallied hard in early trading with GBPUSD breaking north of 1.24. Having cleared resistance at 1.2380, as long as this holds today there is reasonably clear path to 1.2520,” said Neil Wilson, a runes reader and giblets examiner at Markets.com.

The likes of contract caterer Compass Group PLC (LON:CPG), fags maker British American Tobacco PLC (LON:BATS) and booze brands owner Diageo plc (LON:DGE) are not enjoying the pound’s sprightly performance and are wearing losses ranging from 1.8% to 2.7%.

In contrast, UK-focused stocks such as housebuilders Taylor Wimpey PLC (LON:TW.) and Barratt Developments PLC (LON:BDEV), and lenders such as Lloyds Banking Group PLC (LON:LLOY), Royal Bank of Scotland Group PLC (LON:RBS) and Barclays PLC (LON:BARC) are sublimely indifferent to the UK currency’s rally.

Investors were throwing their toys out of the pram after a profit warning from Peppa Pig owner Character Group PLC (LON:CCT) that sent the shares 8.1% lower to 340p.

Going the other way was AFH Financial Group PLC (LON:AFHP), the wealth management firm, which was up 6.9% to 295p after it completed two acquisitions of independent financial advice businesses for a maximum consideration of £7.2mln.

The two deals will bring a combined £215mln of funds under management (FUM) into the fold, raising AFH’s total FUM above £5.6 billion.

8.40am: Blue-chips on the back foot

The FTSE 100 ignored whispers of an interim trade deal between the US and China to move lower in the openings session.

Neither did the promise of fiscal stimulus by the European Central Bank appear to lift spirits as traders focused on the possibility the continent’s major economies may be drifting towards recession.

The index of blue-chip stocks defied early predictions of a positive start to open 13 points lower at 7,331.19.

Near the top of the Footsie leader board was SSE (LON:SSE), whose shares rose 2% after it sold its retail energy arm for £500mln to OVO.

Among the small-caps, GAN, maker of gambling software, shot up 19% after wowing the market with its latest trading.

Proactive news headlines

Katoro Gold PLC (LON:KAT) hailed a year of significant achievement as it seeks to diversify its portfolio towards battery metals.

David Sefton has resigned as a director and executive chairman of Anglo African Oil & Gas PLC (LON:AAOG).

ANGLE PLC (LON:AGL,OTCQX:ANPCY) said a review of its ground-breaking liquid biopsy has identified “advantages” to using the technology when treating head and neck cancer patients.

Indonesia-focused copper mine developer Asiamet Resources Limited (LON:ARS) drastically reduced half-year losses in the first half of 2019.

88 Energy Ltd (LON:88E) has updated shareholders on the progress it has made over the first half of the year, including advancing the farm-out process of Project Icewine in Alaska.  

Chaarat Gold Holdings Limited (LON:CGH) has signed a joint venture with Turkish mining contractor Çiftay İnsaat Tahhüt ve Ticaret to collaborate on the Tulkubash and Kyzyltash projects in the Kyrgyz Republic. In a separate release announcing its results for the six months ended 30 June, Chaarat reported revenues of around US$30.9mln, up from US$0 in the prior year, and an operating loss of US$7.5mln compared to a loss of US$3.7mln in 2018.

Columbus Energy Resources PLC (LON:CERP) plans to scrap a scheme that pays its executives in shares to limit the number of shares in issue. Executive management, which received half of their salary in shares under the scheme, will now be paid only in cash.

Bacanora Lithium plc (LON:BCN) has announced that Derek Batorowski has resigned as a director of the company.

6.45am: Modest gain predicted 

The UK market is expected to open modestly higher following yesterday’s policy decisions by the European Central Bank, which were designed to jump-start the Eurozone economy.

Spread betting quotes indicate the FTSE 100 will open around 17 points higher at 7,362 after the index limped 7 points higher yesterday.

US indices had a solid session on Thursday, with the Dow Jones up 45 points to 27,182 and the S&P 500 9 points firmer at 3,010.

This morning, Asian markets have been steaming ahead with the Nikkei 225 in Japan up 220 points at 21,980 while in Hong Kong, the Hang Seng index was 115 points to the good at 27,203.

On the corporate news front in the UK, a lengthy rant about Brexit, disguised as the full-year results statement from pubs operator JD Wetherspoon PLC (LON:JDW) is likely to be the highlight of the morning.

A surge in costs this year, particularly in staff wages, will mean ‘spoons is unlikely to report higher profits, as it has focused on growing sales, with like-for-like growth reported in July at around 6.7%, with total sales up 7.4%, well ahead of most of its rivals.

Peel Hunt said this will mean profit before tax could fall by around 4% as the company has “sacrificed margins and profits to drive higher sales”, having not increased average drinks prices this year; however, this is much less than the 23% decline in first-half profit, as second-half cost pressure is expected to have slightly reduced.

Significant announcements expected 

FinalsJD Wetherspoon PLC (LON:JDW)

Trading announcements: SThree PLC (LON:STHR)

Economic data: US retail sales, US Michigan

Around the markets

  • Sterling: US$1.2344, up 13 cents
  • 10-year gilt: yielding 0.675%, up 3.7 basis points
  • Gold: US$1,505.00 an ounce, down US$2.40
  • Brent crude: US$60.42 a barrel, up 4 cents
  • Bitcoin: US$10,342, up US$7

Business headlines

Financial Times

The ECB pared interest rates and unveiled a new economic stimulus programme yesterday.

A planned pilots strike has prompted British Airways to cancel the vast majority of its flights on 27 September

The Times

The Democratic Unionist Party last night agreed to accept Northern Ireland abiding by some European Union rules after Brexit in a deal to replace the Irish backstop.

The Co-operative Group has suffered a 43% plunge in pre-tax profit in the half year to July due to an unexpected lower death rate, offsetting a strong performance in its food business.

American retailer Forever 21 has denied reports that it could file for bankruptcy as soon as Sunday, insisting it planned to keep the majority of its 700 stores around the world open.

Google has agreed to pay nearly €1 billion as part of an out-of-court settlement with the French tax authorities to close a three-year criminal investigation into allegations of fiscal evasion.

The US will delay plans to introduce additional tariffs on $250 billion of Chinese goods in a “gesture of goodwill” before the latest round of trade talks begins.

The Daily Telegraph

Topshop and Topman, once the jewel in the crown of billionaire Philip Green’s retail empire, posted a loss of £498 million for 2018, hit hard by the rise of online rivals.

Germany is in recession and will suffer its worst growth in six years in 2019, the Ifo Institute has predicted, as production in eurozone factories continued to sputter.

BP plans to axe some of its oil projects and reduce investment in others in a bid to be more environmentally friendly, its chief executive has said.

Trainline has increased its full-year revenue expectations after total ticket sales in the first half jumped 19% year on year to £1.8 billion.

The Guardian

John Lewis slumped to its first-ever half-year loss as it reported underlying pre-tax loss of £25.9 million in the six months to 27 July.

France has said that it will not allow the development of Facebook’s Libra in Europe until concerns over consumer risk and governments’ monetary sovereignty were addressed.

British American Tobacco will cut 2,300 jobs by next year in readiness for a shift towards non-tobacco products.

Daily Mail

Morrisons has signed up to a new multi-year agreement with online giant Amazon as its sales slip ended three-and-a-half year run of growth.

The board of Woodford Patient Capital Trust has said the write-down will wipe out £36 million from its value – equal to 4p per share – dealing another huge blow to Neil Woodford’s troubled investment trust.

Shares in Rovio, the company behind mobile phone game Angry Birds, dived after it warned profits will be lower than expected.